Business Insider AI stocks jumped after Citadel bought Leopold Aschenbrenner's stock portfolio. But the rebound likely came too late to rescue other hedge funds' July.
- SanDisk, Bloom Energy, and CoreWeave stocks rallied Thursday after Situational Awareness sold its bets.
- The young hedge fund was invested in many of the same stocks that big-name investors had also backed.
- Those funds are surely happy to see AI stocks rebound, but are still likely to be in the red for July.
After a banner first half of the year for many big-name, tech-focused hedge funds, July's been a sobering stretch.
Popular artificial-intelligence-linked stocks like SanDisk, Bloom Energy, and CoreWeave tanked in mid-July amid jitters in Asian markets. Mega-cap stocks like Google and Meta faced minor sell-offs as they continue to increase spending on AI and compute capabilities, with nearly all of the companies' free cash being allocated to the trend. Large chipmakers such as TSMC and Micron were dragged down.
As the industry was waiting until the first week of August to see just how bad July had been, a massive market event disrupted the steady downward trend in these stocks.
After weeks of steep losses and margin calls from bank partners, OpenAI researcher turned hedge fund investor Leopold Aschenbrenner was forced to sell the bulk of his publicly traded equity holdings. Situational Awareness's un sent many of the aforementioned names soaring, benefiting Citadel, which beat out Millennium and Jane Street to purchase the stock portfolio.
The rebound was a welcome relief, but for many hedge funds that owned the same names, it likely arrived too late to save many funds' months. (That being said, these funds might still be up on the year thanks to their strong first halves. Despite losing 67% in July, Situational Awareness year-to-date returns are still 80%, according to a person familiar with the fund.) The holdings referenced below are from the end of the first quarter, and funds may have bought more or sold some or all of their stakes in recent months.
Whale Rock Capital, the Boston-based tech investor run by Alex Sacerdote, was up more than 70% in the first half, driven by many of the same stocks that dragged down Situational Awareness in recent weeks.
The $19 billion firm added to its stakes in SanDisk and Bloom Energy in the first quarter, according to regulatory filings. Both stocks jumped more than 20% on Thursday, but as of midday Friday, SanDisk remained roughly 45% below where it started July, while Bloom Energy was still down about 30%.
Gavin Baker's Atreides Management and Brad Gerstner's Altimeter Capital both added to their CoreWeave positions in the first quarter, a holding Situational Awareness also had significant exposure to. The cloud computing company was up more than 20% on Thursday after the portfolio sale, but the rebound erased only a fraction of the stock's losses in July.
Tiger Cubs — named for their connection to late billionaire Julian Robertson's Tiger Management — had a resurgent first half, in part due to the AI trade. Funds like Coatue, Tiger Global, Maverick, and Light Street all counted tech companies as their biggest holdings as of the end of the first quarter.
Even mega-cap companies got a boost in the frenzied buying following the Situational Awareness meltdown, despite not being in Aschenbrenner's portfolio. Chipmaker TSMC, a big holding of Coatue, Maverick, Tiger Global, and Light Street, erased** **roughly a quarter of its July losses Thursday. Lam Research, which produces parts used in semiconductor manufacturing, was up more than 10% on Thursday but will likely end July down close to 30%. The company is a holding of Coatue, Tiger Global, and Whale Rock.
Tiger Global, Whale Rock, and Light Street declined to comment. Atreides, Maverick, Coatue, and Altimeter did not immediately respond to requests for comment.
Business Insider Get AI news in your inbox
Daily digest of what matters in AI.